If you intend to take a deduction for a charitable gift, pay attention to the letter of the law.

With regret, a U.S. Tax Court judge denied a wealthy Sacramento, Calif., couple a deduction for $18.5 million they took after donating valuable properties to charity because they didn’t attach a proper appraisal to the donation form.

Joseph Mohamed is a real-estate broker, certified real-estate appraiser and prominent Sacramento entrepreneur, according to the decision, which was released May 29. In 1998 he and his wife Shirley set up a charitable remainder trust; such trusts typically pay income for life to the donors and after death give the remaining assets to one or more charities. (The Mohameds’ charities included the Shriners Hospitals for Children, the Sacramento Food Bank & Family Services and the Pacific Legal Foundation.)

In 2003 and 2004 the Mohameds donated more than half a dozen properties worth millions of dollars to their trust. Mohamed filled out the tax returns himself and later admitted he did not read the instructions, according to the decision. (The judge conceded that the instructions were confusing, and the Internal Revenue Service has since altered the form.)

As a result, Mohamed didn’t attach qualified appraisals of the donated properties to his tax returns, although he did note that he underestimated their value because he didn’t want to risk claiming too large a deduction – a point the judge agreed with.

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